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Nightmare before Christmas for NSW govt

Sophie Tarr

The NSW government is bracing itself for a potentially explosive corruption report to be handed down three months before voters go to the polls.

The Independent Commission Against Corruption (ICAC) will suspend public hearings into political donation rorts at the end of next week so investigators can dig into the activities of former police minister Mike Gallacher.

Sidelined cabinet minister Chris Hartcher and fellow Central Coast MPs Darren Webber and Chris Spence are also in line for possible corruption findings.

They are accused of funnelling more than $400,000 in banned political donations through EightByFive, a "sham" company set up by former Hartcher staffer Tim Koelma.

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Lawyers for the Liberal MPs warned on Tuesday that suspending the inquiry would leave reputations in tatters and force a halt to party endorsement processes before March 2015.

But Commissioner Megan Latham said she could not be swayed by the looming NSW election.

"Political considerations cannot guide the commission in its decision making or in the conduct of its inquiries," Ms Latham said.

"To do otherwise would fundamentally compromise the reputation and standing of the commission given that it is and must remain independent of political processes."

She expects public hearings to resume in August and to hand down her findings shortly before Christmas.

NSW is set to go to the polls in March, with the possibility the stench from the cash-for-favours scandal is still fresh in the public mind.

Counsel assisting Geoffrey Watson SC first signalled an adjournment could be on the cards on Friday after he claimed Mr Gallacher and Mr Hartcher helped channel banned Liberal Party donations from former coal magnate Nathan Tinkler's development firm Buildev.

The allegations forced Mr Gallacher's resignation.

"Material has come to the commission which has led to further investigations," Mr Watson said on Tuesday.

"We have sworn testimony from a reliable person which implicates Michael Gallacher."

The inquiry is due to be suspended next week, following testimony from Mr Koelma, Mr Spence, Mr Webber and Mr Tinkler.